Occupy Congress: a peek at the one percent

OpenSecrets.org, a website managed by the nonpartisan Center for Responsive Politics to track the influence of money on U.S. politics, has come out with an overview of the finances of our nation’s leaders.

The richest members of Congress — two Republicans top the list: Darrell Issa of California and Michael McCaul of Texas. You were expecting that. But seven of the ten richest members of Congress are Democrats, including House Minority Leader Nancy Pelosi and Massachusetts Sen. John Kerry.

There’s nothing wrong with legitimately earned wealth. At least there shouldn’t be. The problem is that the wealth earned by politicians of both parties often falls into a gray area of insider access and information, as detailed in a recent “60 Minutes” episode and in a new book by Peter Schweizer, “Throw Them All Out.”

Economist Alan J. Ziobrowski tried to quantify that gray area in a study whose findings are summarized by Sen. Scott Brown, R-Mass., in the Boston Herald:

Between 1993 and 1998, the common stock investment portfolios of senators beat the market by an average of 12 percent a year. During the same time, the common stock investment portfolios of U.S. households as a whole underperformed the market on average by 1.4 percent a year. Even more striking, corporate insiders investing in their own company’s stock only beat the market by 6 percent a year on average.

We measure abnormal returns for more than 16,000 common stock transactions made by approximately 300 House delegates from 1985 to 2001. Consistent with the study of Senatorial trading activity, we find stocks purchased by Representatives also earn significant positive abnormal returns (albeit considerably smaller returns). A portfolio that mimics the purchases of House Members beats the market by 55 basis points per month (approximately 6% annually).

Those are deviations that can’t be accounted for by luck. As I’ve written, the Occupy Wall Street movement is protesting in the wrong places. Instead of inconveniencing commuters and trashing public property in Main Street America, they should be in Washington protesting bipartisan crony capitalism, also known venture socialism.